No fear of the feds

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The conviction of two former Ogilvy & Mather executives for overbilling the White House's anti-drug ad program is unlikely to make government accounts any less desirable. Their big media budgets and visible causes make it easy for ad agencies, already conditioned to the reality of procurement, to overlook the downsides of government accounts-including small profit margins and a much higher level of attention to accounting standards.

So despite the ONDCP case and rather winding government reviews like the infamous California Lottery and the ongoing U.S. Army pitch, those accounts remain hot tickets. One reason is that in an often tumultuous, cyclical business they're dependable.

"They pay on time," said a new-business executive at an agency with a massive federal account. This executive added that government clients are often very clear about results that they want, which in turn makes the all-important bonus picture clearer.

John Jarvis, CEO at MDC Partners' Colle & McVoy, Minneapolis, which handles the Minnesota State Lottery and Minnesota Tourism account, likes the fact there are multiyear contracts for the businesses. Also, the accounts allow for more creativity. "There's an entrepreneurial bent to it," he said.

David Beals, president-CEO of the consultancy Jones Lundin Beals, is overseeing the Army pitch and has managed a variety of state and federal reviews. He said there's a variety of reasons agencies avoid government business. Perhaps the most commonly cited one is that they're paperwork-intensive. Some agencies feel "Too much of [their] energy is going to be drained by managing the boring nitty-gritty side of the business," he said.

One issue is a half-empty/half-full one: The fact that government accounts will go into review after a set number of years. Some agencies are reluctant to pitch a business knowing they'll have to do it all over again in a matter of years. Others see it as more security than they'll get with private-sector clients.

Government accounts do involve a great deal of record-keeping and paper trails. But in an age of procurement officers playing a bigger role in RFPs and agency relationships, that's no longer so unusual.

"That's the way all [accounts] are going," Mr. Jarvis said.

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